Anglo Interim Report for 2010:H1

[quote]
In approving the €8.58bn capital contribution of 30 June 2010, the European Commission also allowed for €1.47bn of additional capital support. The Bank expects that this additional capital will be required in the near term and that further capital support may also be required, the level of which will primarily depend on the discounts applied by NAMA on the full transfer of eligible assets.
[/quote]

Will the EU approve further money for Anglo?

“The Bank’s impairment charge is calculated in accordance with IFRS and reflects losses incurred in the period based on conditions
existing at 30 June 2010. Losses expected as a result of future events, no matter how likely, are not recognised under IFRS.”

“At 30 June 2010
€25.9bn of customer loans were expected to be sold to NAMA. The cumulative impairment provisions on these loans total €9.7bn or
38%.”

Irish Times, 5 .12.08

“THE 20 CONSULTANTS who were sent into the banks have now reported. Their conclusions about recapitalisation and the extent of bad debts are deemed to be confidential and commercially sensitive. Yet, in the official announcement, we are told very good news indeed. The consultants’ report apparently confirms that the capital position of each of the institutions reviewed is in excess of regulatory requirements as at September 30th, 2008. We are also assured that even in certain stress scenarios, the capital levels will remain within regulatory requirements in the period to 2011. We are not told how these exercises were done or even what assumptions were made about future land and property prices. On the face of it, however, the findings are positive, and completely contradict the negativity of speculators and various non-establishment commentators who never had access to the books of the banks.”

@ al
I’m not really sure why people blame seanie and co for this mess. Blaming bankers for being greedy is like blaming a dog for barking. It’s what they do, it’s what they are, no point pretending otherwise. The full blame lies with those who allowed them to indulge their greed to such a catastrophic extent and I solely mean the government when i say that, not the regulators. The level of regulation was pathetic, obviously, but watching our government ministers and our taoiseach point the finger of blame at the poor performance of our regultors is painful to watch. It would be a bit like Alex Ferguson picking a pensioner out of the crowd at old trafford, sticking him in as goalkeeper, then proceeding to blame the poor old sod after the game because his side were hammered 10 nil. Developers are greedy, they want money, bankers are greedy, they want money, regulators are only as good as the powers and manpower they are given….whereas governments are there first and foremost for the good of the people.

Assuming the remaining NAMA bond loans have a discount of 55% and that the provisions on the rest of the book is OK (20% seems completely unsatisfactory IMO) we are looking at another €4.6bn in losses.

“this option (splitting th ebank) retains
the Bank’s existing €47bn funding franchise for the benefit of the State.” Anybody know what that means?

What happens to the subbies on this splitting of the bank? Do they get onto the lifeboat or are they left with the sinking ship?

Arrgh…
“After two previous attempts fell through due to funding difficulties, it was finally sold in July for €180K – just over an 80% discount on the 2006 price.”

When an Economy (GNP) collapses from mid 2008 to now by around 15% do you not think that the secenario for loan losses also changes dramatically ?

According to RTE the NET figure is going to be €25bn but the gross figure is close to €38bn

How is all of this bank bailout shenanigan going to be paid for assuming the debt isn’t spirited away by a handy dose of inflation ? The taxpayer has limited means and the numbers being bandied about have no meaning for the average punter. Anglo I understand will cost a minimum €25bn which is just slightly less than twice annual income tax intake of ~€13bn. Surely the debate should be more specific- not just vaguely “borne by the taxpayer” but what the impact will be in terms of additional income tax and other taxes for Joe taxpayer for the next 10 years.

Tick tock.

Surely this charade is nearly over.

Any mention of the interest clock on all of these non performing loans? Or the rolled up interest accrued to date? That bill is hardly decreasing either.

Or the non recourse element of contained within the write offs? How about how much of the non performing loans were punted on the stock exchange rather than property “investment”, cross securitisation and all that wonderful jargon.

Can we believe that NAMA are still politically independent, given that on all known evidience the transfers to it look light? Are these now being massaged as well to balance the interests of the government and the banks?

At this stage we are in complete fuc)kin la la land (excuse the language) with regard to the whole structure of bank/Nama process etc.

As Mr. Kiberd said in Sunday Times this week, this game is nearly up.

Perhaps some account of the losses had already been taken in the previous results.

@KW

My read is that this bad bank won’t actually be insolvent. It will merely be a bank in wind down and the government will probably guarantee all its liabilities. One way or the others I start to suspect that the subbies will escape and that does stick in the craw.

@ Jagdip

So at least now we have the explanation of AIB’s 18% provision against outstanding NAMA bound loans. It is IFRS nonsense. Purists insist that depositors should discriminate good banks from bad banks. But with the accounts seemingly being a complete fiction that is totally unreasonable. Didn’t Anglo’s 2008 H1 accounts present that corpse as a thriving athlete?

Does it really matter what Anglo reports, or how it reports it or what spin the DoF puts on it? Is not the end-game completely in the hands of the institutional EU? It’ll probably be into the new year before the shape of the end-game begins to emerge. Governments in the core EZ countries will be able to say to their voters: “Yes, Ireland and the Club Med players were really stupid, but they’re really suffering now. Making them suffer more now won’t do them any good and it won’t do us any good either. It’s time to cut them a bit of slack by easing the burden of bond debt in the Irish banks and the Club Med sovereigns.”

It’ll take some courage for governments in the core EZ countries to confront thier voters with this message, but the bond market won’t let them sit on thier hands. Sooner or later they will have to bite this bullet; and, obviously, the sooner the better for Ireland and the Club Med.

Check out Matt Lynn’s article in Bloomberg today:

http://www.bloomberg.com/news/2010-08-30/austerity-hawks-lose-their-celtic-poster-child-commentary-by-matthew-lynn.html

@ seafoid

“Surely the debate should be more specific- not just vaguely ‘borne by the taxpayer’ but what the impact will be in terms of additional income tax and other taxes for Joe taxpayer for the next 10 years.”

Trichet commented in Jackson Hole last Friday, in relation to reducing the debt overhang: “You will not be surprised to know that I exclude any kind of debt repudiation in the industrialized countries from these options.”

So Von Rumpuy’s upcoming proposals are unlikely to include restructuring of debt.

@ The Alchemist

A lot of the Irish property investments in the UK were in office properties in the Greater London area. While value has increased 14% in the past year and will stall at best for a while because of the UK austerity programme, even a tepid recovery but sustained, will be positive for stock in this region.

@Michael H,

Thank you. I had noted that, but felt there was nothing else he could say at this stage. Perhaps Van Rumpuy’s Task Force won’t broach it either. But I remain convinced that, at some stage, some restructuring of debt will be required. And it is very clear that Ireland cannot pursue this course unilaterally – or without enormous support for sovereign funding. The market will continue to harry Ireland, Spain and Portugal until the institutional EU sets out a comprehensive end-game.

Is M. Trichet’s growth option TOGIT while Ireland’s economy will continue to be bled white?

Alan Dukes blandly repeated this morning that he and the management team at Anglo assumed that the first tranche would be transferred to NAMA at 28% which was some “consensus” figure being discussed at the time yet the discount was actually 55%.

A remarkably complacent statement for the chairman of a bank to make.
Did they not have 100% access to all the loan details.
They were after all only a few big developers involved in the first tranche.
Were they not even mildly intellectually curious enough to run a few estimates themselves?

Strangely enough the scales only fell from his eyes on the day before the transfer when NAMA informed them that it would be 55%.

And we trust these people to run a bank and to make proposals to government about its future.

The original reason given to the small people and the turkeys voting for a FF christmas was that saving Anglo would 1.Relase credit to companies and 2. Allow Irelands Financial reputation to be kept intact becasuse saving a bank was sacrosant and systemic so Ireland could continue to loan cash on international markets. The real reason was so that the landowners could get their deposits out of Anglo.

As for number 1 Credit markets are in paralysis and for number 2 we are now told by Moddys and the financial Times that we have lost our international fincial reputation and credit rating BECAUSE we backed Anglo. The proscription has killed the patient. The Doctor and his cronies are still there preaching how they are going to send benefit holders out to work.

We have probably 20 bn of a credit line left before the shutters come down for good on this godforsaken land. Are we going to blow this on building motorways to nowhere, a metro for the odd deranged tourist and another 10 bn to NAMA and Anglo or should we give it the IDA and Enterprise Ireland, the only institutions that give us any hope for the future. Civil service salaries are too high and there are too many of them. Consulants get paid more than anywhere other than Norway. Unlike Norway they are not expected to pay any tax on their earnings and we dont have any oil. Get reaL FAST PLEASE

@BWII

Are we down to down to two options: (1) the good bank/bad bank split (further (unrevealed) details of which the MoF announced were sent to the Commission today) with a long drawn-out wind-down of the latter or (2) EC/ECB/IMF Greek-style administration which provides the sovereign funding support to enforce selective debt write-downs?

The Commission will be unlikely to sign-off on an Anglo restructuring until it has an enforceable limit on the state capital transfers. This may be enough to appease the bond market. But it could keep going, as it did with Greece, until it forces Ireland into Option (2) above.

The net discounted full cost of this option could be much lower than that of Option (1); the difference is the value placed on retaining a measure of sovereignty.

If Peter Mathews is checking in –

For the first time, Anglo has shown the non-NAMA loans to a fine level of detail on page 66 of the interim report broken down by territory and type of loan. It also breaks down the provisions in the same way. We can see for example that commercial property has a 14% provision which given that over half of the first two Anglo NAMA tranches was “associated loans” of investment property and the two tranches attracted a 58% average haircut would seem to suggest that if similar discounts were applied to the non-NAMA property loans then you very quickly get well beyond a €30bn *net* bailout.

It wouldn’t take much to do the calculations but if they had the imprimatur of a property/banking specialist then that might provoke a constructive exchange so that Patrick Honohan can defend/justify his €22-25bn *net*.

If it helps I have converted the note on page 66 to a spreadsheet and calculated the % provisions as well here.

https://spreadsheets.google.com/ccc?key=0AlV6jFjykyK6dHlwSkhNQWRSMTd6WjhkbF9JZFBJSWc&hl=en&authkey=CJDZ5-0B

Its obvious that they know something that we don’t. They have failed to reveal the figures and 2 years later we still don’t know the true extent of the problem. This is an unreal situation. What is forcing the Dept of Finance to keep pumping billions into a black hole when its clear that there are options? The Bondholders have to take a hit. Ireland has to show that it has the taxpayers interests at heart. 50% Default on all Anglo Senior Debt at a minimum and wipe out the sub ordinated debt. Partial Default of sorts on Anglo Debt only. In tandem, a a structured plan to make serious investment into the economy to attempt a kick start.

@BL

In answer to you question-less than 2bn subbies, 14bn senior less 10 guaranteed less 2bn covered leaves 2bn senior unsecured. Other numbers put senior unsecured at up to 4bn if less than 1 year stuff is included. So there is up 2bn subbies that may be burnt and 2-4bn more that others want to burn., unless one is a real zealot who wants to default on Govt paper.

What does “sacrifice of the bond gods is needed now one feels” mean?

Tull.
Thanks ; got to see the actual accounts now at home.
– im correct in then saying that the 14b you refer to is the Medium term notes yes? of which some 7 is for rollover in September.
The quoted piece is a backref to Krugman;
If we all agree, and nobodys disputing it bar Anglo, that there are several (4-10) billions of losses to come then we need to think – at this juncture should the taxpayer continue to bear all the pain? And would some degree of burdensharing not be a good idea, politically? I say now we work to withdraw, if we can, the guarantee from the dated subordinated debt as a minimum.

14bn is the MTN stuff -the 7bn maturing in Sept is Guaranteed plus there is another 2.9bn (?) under other ELG scheme. I would hope the subbies get burned. I think most people would agree.

As regards the 1.5-4.5 bn senior unsecured non guaranteed stuff-well everybody knows the pros and cons of that argumaent at this stage & most have taken sides. Any change there will be taken above the pay grade of most on this thread.

Joseph,

JtO does not do banks. He sticks to his real economy knitting.

@Paul Hunt and Jules

“Restructuring required” is something of an understatement. I think you are calling for some form of default, ie. sovereign default. I agree that we need to pull the rug on the whole sorry mess. But crucially as a first step we need to get our hands on GOLD.

Gold and Silver – traditional stores of value for at least five thousand years – will regain primacy as currency in our societies going forward.

How does Ireland get it its hand on an amount of gold bullion (delivered) equivalent to approximately one quarter of M2? We would have to steal it or plead to someone like the Russians to take us under their wing as a client state. (Or convert to Islam perhaps?)

We need to borrow and buy physical gold. Take delivery and wait till the currency in which our debts are denominated is extinguished. All our favours will have to be called in on this one. The US cannot help us. The UK will not help us. We will need to go to producer countries and pay over the odds or buy from the Arabs – again over the odds.

This is how we survive. Otherwise it is back to the forties. The eighteen forties.

All our debate over the good bank/bad bank issue will prove to be fatuous as events quickly overtake us. All fiat currencies are doomed. Joern Berringer, says “three weeks before a major currency event” which will start the avalanche. He could be wrong it might be three months but the only thing holding up the whole rotten carcass now is hot air. In the meantime our “Brains Trust” worries over tier one or subordinated debt!

So when the second leg of this debacle touches down and we end up in the maelstrom which will be the end of US hegemony and the end of the dollar, we will be sitting there asking ourselves why? Why did we bail out those banks?

Lorcan
This reminds me of the climactic scene in the great Danny Kaye comedy “the Court Jester”, involving poison
“Hawkins: I’ve got it! I’ve got it! The pellet with the poison’s in the vessel with the pestle; the chalice from the palace has the brew that is true! Right?
Griselda: Right. But there’s been a change: they broke the chalice from the palace!
Hawkins: They *broke* the chalice from the palace?
Griselda: And replaced it with a flagon.
Hawkins: A flagon…?
Griselda: With the figure of a dragon.
Hawkins: Flagon with a dragon.
Griselda: Right.
Hawkins: But did you put the pellet with the poison in the vessel with the pestle?
Griselda: No! The pellet with the poison’s in the flagon with the dragon! The vessel with the pestle has the brew that is true!
Hawkins: The pellet with the poison’s in the flagon with the dragon; the vessel with the pestle has the brew that is true.
Griselda: Just remember that. ”

As the meerkats say, simples, yes?

See p.101 for who 886 mn of the Anglo bondholders are…
http://www.irishlifeandpermanent.com/investor-relations/~/media/Files/I/Irish-Life-And-Permanent/Attachments/pdf/annual-and-interim-reports/2010/2010-ir.pdf

550 mn still under guarantee…

If you believe that’s a good idea, I’ve a truck load of green shirts to sell you…

@Bock
The IOU that the government wrote for Anglo (the Promissory note) has been cashed in at the Irish Central Bank. Despite the government telling us the note would take years to pay out in full, it is being used to generate cash already. If Anglo goes bust, the Irish Central Bank will make a loss unless they get their money back immediately from the promissory note (to the full value).

The government could just refuse, I suppose and the Central Bank would take the loss. But hey! Guess who’s responsible for the losses of the Irish Central Bank? That’s right… step right up Mr. Taxpayer, now just bend over… a little to the left… perfect. This won’t hurt me a bit.

@Bock,

I should add that Anglo didn’t go to the ECB (a really big pig buyer) with the pig in the poke, because Anglo knew that the ECB always looks into pokes.

It kept its good pigs for the ECB, and its very best pigs, it sent off to UK to sell through its cousin (Anglo UK) to the pig market there.

All joking apart, its stunning that this hasnt gotten more air/print time

@Paul H
Yes – time for a default and restructuring backed by IMF support. That requires vision and tough leadership. But who is going to argue our case for the obvious? The EU will oppose it because they know they are better off if we suffer to repay them. The government surely won’t. Patrick clearly has sold out now. So no one. Our so-called leaders are shirking public duty for their own egos and they are too afraid to admit they made errors in analysis when they started us down this bailout path. That means we probably just march quietly into a good financial calamity that forces whoever is leadership at the time into action. Ugh.

This whole escapade reminds me that old hans cristen tale “The Emperor’s new clothes” with clowen starring as the emperor. Finally the rating agencies have exposed the governments banking strategy and the clock is now ticking for ireland inc. How deluded was this government to think that a country of this size could credibly underwrite the liabilities of an entire banking system. They are either completely incompetent or have just perpetrated the largest fraud in the history of the state on behalf of their crony pals.

@ Paul Hunt

Paul,

The IMF will issue a number of staff papers in Washington this afternoon; one will be on defaults by advanced countries.

It is ingenious that you can borrow cash from the Irish CB for something that does not actually exist yet. From the POV of the CB, they have replaced IOUs from Bob the Builder, secured on overvalued dirt with IOUs from Brian the Taoiseach, secured on taxation. That is good for the CB.

@Michael Hennigan

Thanks.

@ Jagdip Singh 31st August 7:03pm

Your spreadsheet, presenting the constituent elements of Anglo Loans not going in to NAMA and their related provisions (derived from Anglo’s Interim Report page 66) and also your provisions’ %’s calculations thereon was most instructive.

Based on past, recent and present experience and having conferred with experienced professional associates and considered their views, in my judgement, the provisions totalling €6,233 are much too low.

After careful consideration and adjustment of the %’s on your spread sheet in order to refelect truly recoverable loan amounts, the total provisions should, in my opinion, be increased to a total of €16,323, implying further write-downs totalling €10,090. Revised total provisions of €16,323 represents 43% of the €37,749 Gross loans not going to NAMA.

Yesterday and also during the last week everyone’s attention has focussed on Anglo and the horrifying scale of its losses.

Even more importantly, for the sake of the recovery of our economy and to ensure that we have a properly functioning Banking Sector, we must immediately re-address and correctly re-assess the pressing re-capitalisations of AIB, Bank of Ireland and EBS.

Again, on careful review and consideration of updated relevant loans portfolios, financial, economic and market information, in my judgement, AIB needs at least €10bn (not the “stale” €7.4bn before this year-end estimate announced in March 2010 which was based on information coming from no later than Jan/ Feb) , Bank of Ireland needs €6.5bn (not the €3.65bn “stale” estimate also announced in March by Minister Lenihan) and EBS needs €1bn.

The imminent necessity of extending the State guarantee on Banks’ Liabilities and the urgency of the government’s unavoidable duty to re-acknowledge the true re-capitalisation needs of the 3 viable banks presents them with the opportunity to show true leadership by investing in the banks at a level of €11bn thereby temporarily nationalising them (nothing wrong with that – look at the operational improvements achieved at RBS under 84% State ownership and the effective leadership of Stephen Hester) and “forcing” bondholders in those banks to participate in that re-capitalisation at a level of €6.5bn debt forgiveness (bonds write-downs) which might perhaps include a very minimal (optical gesture token) debt for equity swap.

As part of the Banking Sector improved rescue “re-boot”, Anglo and INBS would be declared “closed” and wound down over an orderly period of years, with bondholders, subordinated and senior, being exposed to the distribution shortfalls (losses) ahead of depositors.

Why should depositors receive this consideration? Because depositors never invested in the Anglo or INBS operations as such …. they placed their deposits at Anglo and INBS because those institutions were, quote from all the advertising, “licensed by the Central Bank and were regulated by the Financial Regulator” precisely as it said on the tin, on the shelf, in the shops!. Depositors are mostly not sophisticated investors. Mostly they are not resourced with professional accountants, stockbrokers, analysts, lawyers, actuaries, valuer surveyors etc to carry out financial and operational analysis and assessment on bank balance sheets and reports.

By contrast, bond investors and bondholders, are generally resourced with those skilled and savvy professionals to carry out analyses and due diligence. These bond investors / bond holders in Anglo and INBS, were investors in the Anglo and INBS operations and were generally investors / bondholders for longer periods than depositors. In the case of Anglo they would have regarded themselves as skilled and savvy professional bond holding investors in the Anglo “model”. They would have been particulalry aware (and perhaps proud) that Anglo had been celebrated, nominated and congratulated, at the Davos conference in Switzerland only about 3 years ago, as having the best banking model in the world! That was the specific accolade given to Anglo at the Davos annual get together of the rich, the powerful (world politicians) and the clever (nobel prize winning economists and leaders of powerful and influential world and european institutions). Besides, the bondholders in banks would have regarded themselves as full members of the powerful financial investment community, on an insiders’ power and and influence par with the large institutional shareholders in the banks and the members of bank boards.

It’s quite obvious that to “re-boot” our Banking Sector we need true and honest assessment, fresh thinking, clear thinking, intelligent planning and decisive action. Above all we need fresh faces! Urgently!

Meanwile back at the ranch, from RTE today:

“the Greens want to see real progress on the banning of corporate donations to political parties by the end of the year”

Obviously have awoken from their slumber from under that tree. It’s the big issues that really matter.

Here’s one for all of you. What if Allied Irish Bank requires twice or three times the level of recap than the €7bn figure mentioned? Go back a year and Sean Quinn was the elephant in the room. Now it’s Anglo stomping around the room creating havoc, but hold on who is the baby elephant sitting quietly in the corner. Plausible…..?

@Peter Matthews

Why should depositors receive this consideration? Because depositors never invested in the Anglo or INBS operations as such …. they placed their deposits at Anglo and INBS because those institutions were, quote from all the advertising, “licensed by the Central Bank and were regulated by the Financial Regulator” precisely as it said on the tin, on the shelf, in the shops!. Depositors are mostly not sophisticated investors. Mostly they are not resourced with professional accountants, stockbrokers, analysts, lawyers, actuaries, valuer surveyors etc to carry out financial and operational analysis and assessment on bank balance sheets and reports.

And what about the ‘high street’ investor who makes decisions based on published accounts and reports, and perhaps a bit of nosing about? Why has the government ignored the losses incurred by ‘ordinary’ shareholders’ as by consent the facts laid before the public by Anglo over several years were not a fair account of the true state of affairs.

There was a concerted campaign involving private individuals and state actors to present a rosy picture of Anglo for months prior to its collapse. Many will recall the condemnations directed at ‘whisperings’ about Anglo’s health. The facts are that the Financial Regulator and the Central Bank stood over Anglo and reassured the public that Anglo was in rude health, while at the same time the same institutions had information indicating otherwise.

Bondholders in any category will not be ‘burnt’. The fixed income from the preference shares paid pensions etc. The government won’t and can’t upset ECB sensibilities. However, the shareholder who managed his/her own pension is getting no such consideration. I really am looking forward to the next election.

“The clean-up bill for Anglo Irish Bank [ANGIB.UL] may top an estimate of 25 billion euros ($32 billion), a minister said on Wednesday, as the value of its debt still to be moved into Ireland’s ‘bad bank’ remains unclear.”
Martin Manseragh, quoted on Reuters

@Rob S

When discussing Anglo we need distinguish between three terms

(1) Losses on the NAMA and non-NAMA loans
(2) Net bailout costs (different to 1 because of existing capital, pre-existing loss provisions, possibly not honouring bondholders in full, etc etc etc)
(3) Gross bailout costs (some of which will be recouped over time)

From my very rough calculations a 58% average NAMA haircut would now mean Anglo would have a net bailout cost of just below €25bn. If non-NAMA loans have a similar risk profile to NAMA loans (see Peter Mathews above) then the net bailout rises to the mid-30s according to my back of the envelope calculations. The gross bailout would be about €5bn more on top for Anglo Newbank seed capital and short-term funding which would be recouped over time.

In summary at this stage it comes down to your views on the non-NAMA loans. And remembering in March Anglo 2020 thought a 28% haircut was adequate for the NAMA stuff which now turns out to be double that, I am deeply suspicious that the non-NAMA losses will rise.

@Rob S

There is a difference between the NAMA (and non-NAMA) loan losses and the net bailout. What I think I said was that Anglo should be recognising another €4.64bn of losses on NAMA loans on top of the losses reported yesterday. But remember that Anglo has capital of €6.5bn (page 26 of the interim report).

Or to put it another way, Anglo has some capital of its own to absorb some of the losses. So if losses increase it can absorb them without seeking an additional handout.

Jagdip
I think we can take it as pretty likely that the non-NAMA loans are deeply impaired. They may not be 60% impaired but they are deeply impaired.

Can I double check something on the coporate deposits. The ones which of less than three months are no longer covered post-September.

Does that mean the deposits have to have been with the bank for three months to be covered OR is it that they have to be deposits which are tied to the bank for a period of more than 3 months (aren’t accessible for three months or greater).

From the information that Anglo has provided I tried to do a bottom up approach to calculating the future possible losses on the non-NAMA loans in particular.

Existing NAMA loans & provisions
http://img695.imageshack.us/img695/3121/angloprovisionsonnamalo.png

The provisions for losses on the NAMA loans are still on the light side at 38%, given the last 2 tranches have transferred at 55% and 62%. However, through the NAMA process I think these estimate should be more accurate than the non-NAMA loans as more analysis has been forced on the banks for these loans.

I have applied the NAMA % provisions for each loan type and location to the non-NAMA loans to calculate a more accurate provision for these loans.
This results in a non-NAMA provision of 29.1% and a further loss of just under €3.4bn

http://img405.imageshack.us/img405/5909/adjustednonnamaloans.png

However, as we know Anglo is under providing for the loans going into NAMA. By using the actual discounts on Tranche 1 & 2 as a more accurate estimate of the true value. The provisions on the NAMA loans would need to be increased to say 55% (lower of two tranches) from the current 38%

This adjustment increases the provision on the NAMA loans to 55% and generates an additional loss of €4.6bn The adjustment increases the discount on the non-NAMA loans to 42% and generates an additional loss of €9.7bn from current provisions.

The future losses under these assumptions is €14.3bn and brings the total Anglo losses to €37.2bn. Against this you need to offset the “excess” capital Anglo is currently holding on its balance sheet. It currently has €7bn in capital and assuming it needs to at least €3bn (€82bn – €20bn ) X 5% then there is €4bn to spare.
That brings the total state funding to €33.2bn.
Not to far off the €35bn than S&P and many others have been projecting.

http://img825.imageshack.us/img825/8665/nonnamawithtrancheadjus.png

@DE

That’s impressive work! For those who will say that NAMA loans should be prone to higher losses because they’re primarily for land and development and as an asset class L&D fell most, I would say the following:

(1) You’re right – according to Savills development land is off 75-90% compared to say commercial 60% or residential 35%.
(2) Land and development makes up a small part of NAMA tranche 1 and 2 (see the NAMA accompanying key tranche detail below). Less than 30% was land and development. The rest was the sort of loan that is in the non-NAMA portfolio at Anglo – same assets, same type of borrowers, same lender, same lending officers, same lending standards, Why should the losses will be less?

http://www.nama.ie/Publications/2010/NAMAKeyTranche12Data23Aug2010.pdf

All of these is now becoming very tangible. What’s the best way of putting it to those who claim the bailout will cost €22-25bn, so that the matter can be constructively dealt with?

@JS

‘All of these is now becoming very tangible. What’s the best way of putting it to those who claim the bailout will cost €22-25bn, so that the matter can be constructively dealt with?’

An informed Public Protest – with crystal clear demands (rather than requests) for maximum transparency in return for looting already inflicted – not led by and not tolerating leninists swamping these with their flags (SWP). Led by some respected dissenters in the middle class who can hold their nerve – unlike FOT.

One respected citizen (interview here – http://www.webcitation.org/5fhA1mDPH) started the icelandic protests. Yes – one. Sometimes those you are opposing are not interested in being constructive and have other agendas. To explain this stuff clearly to the population the media – and the ‘balance’ that they achieve by allowing Brian Lenihan to lie unchallenged – need to be routed around. It is as simple as that.

A list of what the taxpayer should know but does not know would be a good start. And some clear simple demands.

“At the beginning of the demonstrations there was a lot of unfocused anger around, as people tried to come to grips with what had happened. Our demands really took shape on the third Saturday, as we began to gain a better focus. They were: RÍKISSTJÓRNINA BURT! [away with the government!], STJÓRN SEÐLABANKANS BURT! [away with the Central Bank’s board!], STJÓRN FJÁRMÁLAEFTIRLITSINS BURT! [away with the board of the Financial Supervisory Authority!], and KOSNINGAR EINS FLJÓTT OG AUÐIÐ ER! [elections asap!].”

@ Brian Lucey

given that you’ve mentioned it a few times on different threads, can you tell me when this alleged 10bps rally in Irish bond yields took place? Bloomberg shows it in a 5bps range all day – until about 3pm when it drops back by about 5-10bps (due to the ISM).

That post was sent from a mobile. Damn predictive text